The Prospects For European Disunion – OpEd

Europe is, economically speaking, in dire straits, and the two most powerful economies on the continent are, at least on paper, led by individuals with considerable differences. The previous French President Nicolas Sarkozy was not merely regarded as a man of austerity but a man Chancellor Angela Merkel could do business with. The Sarkozy-Merkel imprint marks the entire bailout strategy that is now being employed against the Greeks. It is a model that has ushered in technocratic governments whose loyalties lie less to the citizen than the budget. Balancing accounts and paying creditors is considered the noble thing to do. Sovereign interests, at least for those with empty wallets, come second.

Greek efforts to form a government have so far failed, and the Germans are getting agitated. High up on the list of points that have been discussed between the freshly elected François Hollande and Merkel in their first meeting in Berlin is seeking a unified stance on rectifying the problem. The issue is how far Merkel will budge, and how far Hollande is happy to yield to Berlin’s hardline approach on such matters as the fiscal compact.

Before audiences, and before the electorate, Hollande has adopted a stance that flies in the face of Merkel’s harsh program of economic medicine and no-frills accounting. On French television, when asked what gifts he would be taking to Berlin, his response was general: ‘The gift of growth, jobs and economic activity.’ This on its own says nothing, and nor is it designed to. Hollande is confident, and is carrying a powerful baggage of sentiments with him.

Hollande’s party spokesman Benoît Hamon has given a clue on Hollande’s position. After complaining that Europeans were simply not buying anything any more, Hamon explained that Merkel’s primacy, and that of Germany in Europe, had to be stood up to. ‘We didn’t have an election to get a European president called Mrs Merkel who has the power to decide everyone else’s fate’ (Guardian, May 14). Scratch the surface further, and the unpopularity of the German position becomes clearer.

In Berlin both leaders have, unsurprisingly, given little hint that they are at loggerheads. For Merkel, ‘We are aware of our responsibility, as Germany and France, for a good development of Europe.’ For Hollande, ‘everything that can contribute to growth must be put on the table by everyone.’ That is all to the good, till you realise that Merkel opposes the joint issue of Eurobonds while embracing the ideal of improving competition.

On the face of it, Hollande’s position mirrors that of the Syriza party in Greece – one can hardly repay a debt when there is nothing to draw upon. Accounts can hardly be balanced in times of economic contraction. Growth is the mandatory pre-requisite, though how that growth will be feasibly achieved is a difficult prospect. France stands a better prospect to grow than Greece, and being competitive is fine if you have something to be competitive about.

Merkel herself may be facing a revolt at home, despite polls in Germany saying that as many as 61 percent of Germans approve of her austerity stance. For one, the finger is being pointed in her direction, notably amongst members of the SPD party, that Greek nationalist extremism is due, in part, to her refusal to bend. The emergence of a neo-Nazi movement in Greece has German voters concerned. Harsh economics can often engender extreme politics.

Germany’s most populous state, North Rhine-Westphalia, returned the Hannelore Kraft led SPD-Greens to power in a thumping result, suggesting that the austerity brand is losing its appeal amongst some local German voters. The Christian Democrats, led by Merkel’s environment minister Norbert Röttgen, barely had a look in, getting their worst result since 1949 in securing a mere 26 percent of the vote. This follows defeat for them in the state of Schleswig-Holstein. Attempts to label the SPD-Green coalition as a ‘pro-debt’ party did little to turn voters away. With considerable effect, government campaigners have sought to underline the poor level of investment in parts of Germany. The emphasis, at least at the state level, is growth rather than belt tightening, notably in depressed areas.

The anti-austerity platform Hollande embraced was largely an anti-Sarkozy one, electorally expedient, necessary to distinguish himself from a deeply unpopular opponent. But populism doesn’t necessarily translate into coherent policy. Whether it becomes one that reflects an anti-German position is making too strong a contention. Both Merkel and Hollande have made it clear that balancing the books is a priority for both their governments, though their means may differ at points. The Greeks will be wondering whether the French-German position will fracture. That said, disunion will be avoided, though each leader will have a different audience to pander to.